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Published: May 8, 2007

 
 

The Importance of Being a Must-See Destination

Somewhat higher up the competitive ladder lies Estonia, 28th in the T&T index. After the deregulation of Europe’s airline sector, a number of discount carriers expanded their networks to Tallinn, Estonia’s capital and main seaport. Tourists seeking low-cost vacations have poured into Estonia in growing numbers. To build on this trend, Estonia’s tourism board has launched a campaign targeting low-budget tourists with advertising that promotes the nation as an inexpensive place to enjoy rich cultural history and traditional countryside getaways.

Following its admittance into the EU in 2004, Estonia privatized much of its formerly state-owned travel sector. For example, in order to increase travel efficiency and tourist services, in late 2004 Estonia consolidated a number of transportation and hospitality companies into the privately held Go Group. The organization is made up of four businesses — international rail links, bus travel, tourism support, and a hotel — operating under one integrated brand. Thanks in part to its active T&T sector, Estonia has enjoyed one of the highest GDP growth rates among all emerging countries, close to 10 percent in 2005.

Asia’s Tourist Magnets
China and India are hardly backwaters in terms of tourism, but they are also worth a mention, as we anticipate that their T&T industries can look forward to an accelerating boom.

For example, in addition to China’s well-known attractions, the 2008 Summer Olympics in Beijing will certainly boost domestic and international tourism. However, China has work to do if it wants to parlay its status as a popular destination into a means of economic development. With an index ranking of 71, China does not stand out as a high performer among emerging countries; by comparison, Tunisia ranks 34th and Thailand 43rd. Although China has established itself as the world’s manufacturing plant, the T&T industry has clearly been a lesser priority: The sector remains one of the least progressive in terms of property-rights reform and financial performance, and most of the tourism infrastructure is still publicly owned, including 63 percent of the country’s hotels. Yet China has been improving its ground and air infrastructure assets (through the consolidation of its national airline industry, for instance) to keep up the pace of growth in the T&T industry. In order to fortify business travel and tourism, the government plans to construct up to 50 new airports by 2010. Still, despite these efforts, China’s policy environment is not conducive to T&T development (ranked a low 97th in the T&T report), with strong foreign ownership restrictions and stringent visa requirements. Environmental regulation also earns low marks.

India was the top-ranked developing country, (with “developing” countries defined as those with a GNP per capita of US$876–$3,465, compared with “emerging” countries with GNP per capita of $3,466–$10,725) at number 65 in the T&T index, based in part on its high ratings for transportation infrastructure, international links to the air transport network, and safety. With tourist arrivals expected to increase 10 percent per year for the foreseeable future, however, India cannot afford to be complacent. The government is considering modernizing its air navigation system, as well as privatizing and expanding its largest international airports to accommodate future growth. In order to untangle the country’s legendarily crowded roads and railways, India plans to invest about $116 billion in infrastructure upgrades. The country is also addressing a chronic hotel room shortage: Tourists can look out for 100 new budget hotels near railway stations in the next several years, courtesy of the Indian Railway Catering and Tourism Corporation (IRCTC), while foreign investment from Accor, Marriott, Ritz-Carlton, and Four Seasons will expand the number of rooms at the other end of the spectrum. Finally, India will also need to resolve a number of other problems, including regulatory barriers to foreign direct investments, high visa costs compared with neighboring regions, and significant delays for inbound travelers from South Asia.

 
 
 
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Resources

  1. International Monetary Fund, World Economic Outlook: Financial Systems and Economic Cycles, September 2006: This annual report from the International Monetary Fund provides both a big-picture and country-by-country view of global economic development. Click here. 
  2. World Economic Forum, Global Competitiveness Report 2006–2007, September 2006: The World Economic Forum’s analysis of the global competitive environment provides a useful perspective in conjunction with the Travel and Tourism report. Click here.
  3. World Economic Forum, Travel and Tourism Competitiveness Report, 2007: The report on which this article is based goes into more detail for industry leaders, including a closer look at the variables that went into the travel and tourism index. Click here.
  4. World Travel & Tourism Council Web site: The somewhat commercial, but useful, Web site of the major trade organization for the world travel industry includes its own competitiveness index, as well as articles and country reports. Click here.
 
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